The yield on 10-year treasury bonds dropped over 6% this morning as I type. This drop is huge for the bond market and indicates a lot of fear out there. What else do people buy other than treasuries when there is fear? Gold of course! Though gold doesn’t quite seem to be getting the same kind of action at U.S treasuries. Gold is now sitting at $1,241, up $9 this morning.
Next on the block for discussion is oil prices. In case you haven’t been paying attention, oil prices have been dropping… no crashing. Is this a good thing or a bad thing? Well that is kind of tough, as low oil prices usually means world economies are not doing so well… then on the other hand it means prices should be cheaper which is easier on the old wallet.
From the Rude Awakening:
“Maybe China left the building? Maybe the Saudis finally went on the offensive? Whatever the case, the market is tasting sour crude on its lips,” Matt says. “In a sense, we really are seeing the perfect storm in the crude market. Remember, unlike some less-reactive markets, crude oil is highly impacted by supply and demand. To that extent we’re seeing WAY MORE supply, with U.S. shale production and OPEC opening the spigots. At the same time we’re seeing WAY LESS demand in the form of lower expectations from the Eurozone to Asia.”
If gold prices are creeping up and oil prices are melting down that seems like it would bode well for gold stocks wouldn’t it? Cheaper mining costs (oil), and better prices for the metal they sell. Well, at this moment of typing the Market Vectors Gold Miners ETF (ticket GDX) is up over 1%. I would strongly suggest making a list of your favorite gold and silver stocks and wait for a confirmed uptrend. We could be very close to a bottom.